You think it’s hard getting to the top? Try staying there.
The accelerated churn rate of the S&P 500 indicates that at least half of today’s top U.S. companies will get replaced by someone new over the next decade. That is a mind-boggling market value of $13.5 trillion up for grabs. And the craziest part is who replaces the old market leaders: It’s often companies that, just a few years before, were considered scrappy little startups.
So how does a new company rise to slay a giant? It doesn’t happen by accident. Think of these upstarts as if they’re playing a deliberate game of chess—except in this case, the incumbent has been playing the game for years, and the startup is entering the game halfway through. That means the startup is at a severe disadvantage, and normal competitive strategies just won’t work.
To unseat a champion, a smaller company has to play by a completely different set of rules.
In my many years of working with successful disruptors, as well as researching the same at Cambridge University’s Judge Business School, I have seen a lot of companies lose this game…as well as a lucky few win it. Here are the four moves that I’ve seen have the highest chance of success for those aspiring to take down Goliaths.
1/ Change the basis of competition.
For startups, the rules of the game are rigged. The larger incumbent has set the terms of the competition, and its scale, experience, and technology are nearly impossible to beat.
Consider every brick-and-mortar retailer that went up against Walmart in the 2000s. Walmart’s basis of competition was its ability to sell consumer goods at the lowest possible prices, and it accomplished that profitably because of its remarkable hub-and-spoke distribution model and large, centralized procurement budgets. Other retailers could not catch up…until Amazon.
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